On June 24, 2006, the Rhode Island General Assembly approved a bill to comprehensively address the state’s energy needs and to reduce consumer costs. “The Comprehensive Energy Conservation, Efficiency & Affordability Act of 2006” is an amalgamation of eight separate pieces of legislation introduced during the 2006 legislative session. The Act was signed into law by Governor Donald Carcieri on June 29, 2006.

The Act addresses capacity, purchasing, energy efficiency, and expanding assistance programs for low-income residents. It also creates the Office of Energy Resources to implement and oversee the various provisions of the new law. Among the goals of the Act is the creation of stability in energy pricing through diversification of energy resources, energy conservation, efficiency, demand management and prudent procurement and the development of renewable energy resources. Some noted features of the Act include the following.

The Act establishes “least cost procurement” as a principle for meeting electrical demand and a demand side management program for natural gas. To implement these goals, the Act charges the Rhode Island Public Utilities Commission (the “commission”) with establishing standards and guidelines no later than June 1, 2008 for system reliability procurement, distributed generation, and demand response. The commission may establish standards and/or rates for (A) qualifying distributed generation, demand response, and renewable energy resources; (B) net metering; (C) back-up power and/or standby rates that reasonably facilitate the development of distributed generation; and (D) such other matters as the commission may find necessary or appropriate. The standards and guidelines adopted by the commission are subject to review not less frequent than every three years.

The Act requires each electrical distribution company to submit a plan for system reliability, energy efficiency and conservation procurement to the commission on or before September 1, 2008, and triennially on or before September 1, thereafter through September 1, 2017. In addition, each electrical distribution company must also provide a status report on the implementation of least cost procurement on or before December 15, 2008 and on or before February 1, 2009. The report must include the targets for each energy resource, including the achieved percentages for efficiency, distributed generation, demand response, combined heat and power, and renewables.

No later than March 1, 2009, and each March 1 thereafter though March 1, 2018, each electric distribution company must also submit a proposed procurement plan or plans to the commission consistent with the purposes of least-cost procurement. The supply procurement plan(s) must include the acquisition procedure, the pricing options sought, and a proposed term of service for which standard offer service will be acquired. The term of service may be of various, staggered term lengths and acquisitions may occur from time to time. There also may be separate procurement plans for residential and non-residential classes or separate plans among 2 nonresidential classes. All the components of the procurement plans will be subject to commission review and approval.

The Act encourages electrical system reliability by promoting diversification of fuel sources, distributed generation, and demand response usage reductions and/or deployment of distributed generation capacity. According to a statement by the general assembly, this is to guard against brownouts and rolling blackouts.

The Act also establishes a renewable energy development fund for the purpose of increasing the supply of NE-GIS certificates. This fund is to be administered by the Rhode Island Economic Development Corporation and is to have a board of trustees to oversee the program. The board of trustees is charged with (1) developing plans and guidelines for the management and use of the fund; and (2) evaluating proposals and/or actions to obligate, use and/or sell, dispose,trade or exchange assets held by the fund.

The uses of the fund include: (1) stimulating investment in renewable energy, including multi-year agreements for renewable energy certificates; and (2) issuing assurances and/ or guarantees to support the acquisition of renewable energy certificates and/or the development of renewable energy sources for the state. NE-GIS certificates acquired through the fund may be conveyed to obligated entities or may be credited against the renewable energy standard for the year of the certificate provided that the commission assesses the cost of the certificates to the entities benefiting from the credit.